The idea that universities should be treated as leaders in economic development initiatives is gaining credibility.

And University of Michigan Vice President for Research Stephen Forrest is among those generating a groundswell of support for the idea that universities should develop better relationships with their local business communities.

U-M played a prominent, public role in the attraction of Google Inc. and Aerrnova Aerospace S.A. to Ann Arbor, Forrest said.

But universities need the support of the state to maintain efforts to stay involved in local economies, he said.

"The state and the people of this state absolutely depend on the health of the universities," Forrest said.

Forrest is leading a first-time conference called "The Role of Engaged Universities in Economic Transformation" - which will take place Oct. 15-16 at U-M - to discuss how academic institutions can develop closer ties to business.

The University Research Corridor event, conducted in conjunction with Michigan State University and Wayne State University, will feature a number of prominent business speakers. They include Ardesta CEO Rick Snyder, former CEO of Gateway Computers, and Meijer Inc. President Mark Murray.

Forrest recently spoke about the role of universities and business with Ann Arbor Business Review reporter Nathan Bomey.

Business Review: Historically, universities have fostered a culture that promotes research, but doesn't necessarily focus on ties to business. Why is it now that we're realizing the need to have a closer relationship with business?

Forrest: There are a lot of things that are driving that, but it's actually not a local movement, it's a global movement. It really started in the early '80s with the National Science Foundation mandating interactions with industry in some of their big programs, primarily the Engineering Research Centers program, which had to have industry partnerships. ...

In the Great Lakes region we're particularly pressured by macro trends in the U.S. economy - that manufacturing as a fraction of our GDP has been declining for some 15, 20 years.

And the University of Michigan, for example, Wayne State and MSU are public universities and we're here by public trust. And because of that we realize we cannot idly sit by and not play our proportionate role in the transformation that everybody knows we need to undergo.

If the state continues to cut funding for higher education, do you think universities can continue to play a role in helping to revitalize the economy? How critical is it that the state increases funding for higher ed institutions?

Well, it's a very important issue. It's a very important contribution. The state of Michigan cannot anticipate that it can be competitive in the U.S. or globally - and it has to be competitive globally to succeed today because of the nature of the marketplaces - if it follows a path of divesting itself of its educational institutions.

The state and the people of this state absolutely depend on the health of the universities. The good news is that the university system in the state of Michigan is really second to none. It's a spectacularly fine university system.

So we have a lot of the foundations for making the changes. I think the universities recognize that because we get money from the state that we have to respond productively and enthusiastically.

But the state's contribution to this is essential if we are to be competitive. And I frankly don't see an alternative scenario which looks very good for this state. We're losing population and we're losing the population that is the knowledge-based piece of the population. And that does not create a sustainable future for anybody in Michigan.

Are you presented with a practical challenge of helping professors change their mindset about research and commercialization efforts?

No, not at all. Because first of all we don't want to change anybody's mindset. ... It just turns out that a lot of our professors want to do this, so all we're really doing is providing them with easier mechanisms and reduced barriers to doing this kind of research. So in a sense it's uncorking the bottle that's always been filled with enormous potential.

We're not trying to create anything new in our faculty. And so many of the new faculty that we bring in - the young people, particularly - their DNA is already programmed to be very interactive with the outside world.

Ann Arbor SPARK has said that a majority of outside companies that decide to locate here are making the university a significant factor in their decision. How is the university's role in business attraction changing?

There, I think, the University of Michigan is probably one of the more advanced in the country. We directly contribute to the budget of SPARK. We have our faculty and our president and myself and others - when there's a company coming to town, we bring these people out to meet the companies, to show them how there are synergies, how it works with us.

And I think it has played a very direct, and in some cases decisive, role in having companies locate here. Two, for example, are Aernnova and Google. And they have both been quite open about saying the university [played a role in their decision].

I mean, why would Google want to move out of the Bay area? What is it about Ann Arbor? Well, it's got to be the university - it's got to be one of the primary attractive points. Otherwise, it could be anywhere.

How can universities in general foster better relationships with business while still making sure they don't take their focus off of students?

I don't think those are conflicting values, to paraphrase a speech by President Clinton a long time ago. The students learn by working with companies and [dealing with] company-based problems, so those don't have to be in conflict whatsoever and they shouldn't be.

We do have to manage conflicts of interest, and we're very proactive in doing that. Faculty that start companies have a natural conflict if they're doing some of the research here at the university.

Those are not necessarily bad things, they just need to be managed and there has to be some form of oversight. And we do that.

How critical are internship programs locally in keeping students in the area?

The most important thing we do in keeping students in the area are internships. ... I have to speak for U-M, but I'm sure it's true of almost every university in this state. Most students who come to U-M want to stay in Ann Arbor after they graduate.

But if they don't have the opportunity here, then they leave, because it's all determined by jobs. So we need to create the opportunities and this is one way to do it.

Internships are important because they allow students to become acquainted with companies, usually in the locality, [although] it could be anywhere in the state or in the region for that matter, but I think those things have enormous impact.

What do you hope to accomplish with this conference?

We're hoping to share experiences. That's important. What do various sectors of the economy need to make this happen? The academic, the industrial, the governmental sides, what's everybody's expectations in making the U.S. and the region more competitive?

How do we expect to learn, how to engage ourselves as universities better to meet those needs?

We have a day that's filled with workshops afterwards where we're going to hopefully be able to come up with some easily digestible conclusions and action items that will lead us through the next few years.

So it's really a substance-oriented activity. If you get all these people together, you're going to come up with something.